REIMBURSEMENT OF SUBPOENA COMPLIANCE COSTS

For organisations doing business in the United States, complying with federal subpoenas can become an expensive and unwelcome occurrence. Compliance can become quite costly, especially considering outside vendor expenses, attorneys’ fees, and reduced productivity while employees spend hours searching for and compiling responsive documents.

Some relief is available through Federal Rule of Civil Procedure 45. Under Rule 45, subpoenaed third parties can recoup their “significant” compliance costs as long as they are reasonable and necessary. Although Rule 45 sets forth exacting standards, organisations with knowledgeable counsel can recoup compliance costs that might otherwise be written off.

Mandatory cost shifting under Rule 45

Rule 45 states that a third party which receives a federal subpoena and wishes to be reimbursed for expenses must object to the subpoena “before the earlier of the time specified for compliance” or 14 days after service. Once the third party objects, Rule 45 places the onus on the serving party to move to compel production, after which a court may require the third party to comply with the subpoena but “must protect [the third party] from significant expense resulting from compliance”.

Case law interpreting Rule 45 has held cost shifting is mandatory once a court determines compliance with a subpoena imposes “significant expense”. However, if a third party complies voluntarily with a subpoena before being ordered to comply, the third party has often been held to have forfeited its right to reimbursement under Rule 45.